Year 0 1 2 3
NCF (100,000) 30,000 50,000 60,000
PV(NCF, WACC) (100,000) 27,273 41,322 45,079
Accum NCF 30,000 80,000 140,000
Accum Discounted NCF 27,273 68,595 113,674
WACC 10%
NPV 13,673.93 > 0 --> accept the project
IRR 16.79% >10% (required rate) --> accept
PP 2.33
DPP 2.70
0 1 2 3 Tax rate
Initial investment (90,000)
Quantity 50,000 50,000 50,000 Debt
Variable cost 4 4 4 Equity
Selling price 6 6 6 WACC
Sales 300,000 300,000 300,000 NPV
Variable cost 200,000 200,000 200,000 IRR
Fixed cost 40,000 40,000 40,000 PP
Depreciation 30,000 30,000 30,000 DPP
EBIT 30,000 30,000 30,000
Taxes expense 9,000 9,000 9,000
Net income 21,000 21,000 21,000
Depreciation add back 30,000 30,000 30,000
Changes in WC needs (25,000) 25,000
Opportunity cost (10,000)
Net Cash Flow (125,000) 51,000 51,000 76,000
PV(NCF,WACC) (125,000.00) 45,446.44 40,497.63 53,777.77
30%
Weighted Cost of fund
60% 11%
40% 19%
12.22%
14,721.85
18.51%
2.30
2.73
0 1 2 3 4
Initial investment (23,000,000)
Quantity 85,000 102,000 114,240 116,525
Quantity growth rate 20% 12% 2%
Variable cost 190
Selling price 345
Sales 29,325,000 35,190,000 39,412,800 40,201,056
Variable cost 16,150,000 19,380,000 21,705,600 22,139,712
Fixed cost 2,400,000 2,400,000 2,400,000 2,400,000
Depreciation 4,600,000 4,600,000 4,600,000 4,600,000
EBIT 6,175,000 8,810,000 10,707,200 11,061,344
Tax expense 2,161,250 3,083,500 3,747,520 3,871,470
Net income 4,013,750 5,726,500 6,959,680 7,189,874
Depreciation add back 4,600,000 4,600,000 4,600,000 4,600,000
Changes in WC needs (1,500,000) (5,278,500) (5,911,920) (6,030,158) (5,125,635)
Sell asset
Net Cash Flow (24,500,000) 3,335,250 4,414,580 5,529,522 6,664,239
PV(NCF,WACC) (24,500,000) 3,029,222.77 3,641,623.40 4,142,819.56 4,534,838.66
Year 0 1 2 3 4
Sales 29,325,000 35,190,000 39,412,800 40,201,056
Changes in WC needs (1,500,000.00) (5,278,500.00) (5,911,920.00) (6,030,158.40) (5,125,634.64)
5 Tax rate 35%
Weighted Cost of fund
99,046 Debt 65% 9%
-15% Equity 35% 18%
WACC 10.10%
NPV 14,627,522.59
34,170,898 IRR 23.87%
18,818,755 PP 4.12
2,400,000 DPP 4.38
4,600,000
8,352,142
2,923,250
5,428,893
4,600,000
23,846,213
4,600,000
38,475,106
23,779,018.20
5
34,170,898